Elixir sunsets deUSD synthetic stablecoin following Stream Finance unwinding, aims for full redemptions

Elixir has decided to sunset its deUSD synthetic dollar stablecoin following losses stemming from the Stream Finance unwinding earlier this week. The protocol has reportedly already processed redemptions for 80% of deUSD holders, according to an X post on Thursday.

On Nov. 4, DeFi protocol Stream Finance halted withdrawals after an external fund manager disclosed a $93 million loss. The protocol held a debt of at least $285 million to various lenders, including over $68 million owed to Elixir. 

Launched in mid-2024, Elixir’s deUSD aimed to provide a “truly decentralized” non-custodial alternative to Ethena Lab’s USDe synthetic dollar. The asset gained prominence as a collateral asset and was even tapped by Hamilton Lane's tokenized HLSCOPE fund for backing.

Stream had borrowed deUSD to backstop its own xUSD stablecoin, which is currently trading below $0.20, a depegging that is causing knock-on effects elsewhere, most notably in the collapse of Stable Labs’ USDX token. 

Despite disabling deUSD’s mint/redeem infrastructure on Thursday, Elixir still intends to redeem 100% of deUSD claims 1:1 for USDC. The project is working to spin up a claims portal and has reportedly taken a snapshot of all remaining deUSD and sdeUSD holder balances.

The project decided to disable withdrawals through its existing portal in part to “remove any risk of Stream liquidating deUSD before repaying their loan.”

In a previous post, Elixir noted it is the only creditor with “full redemption rights at $1” with Stream, though it has since noted Stream allegedly “has decided not to repay or close positions.”

“As it stands now, Stream holds roughly 90% of the deUSD supply (~$75m), while Elixir holds a similar proportion of its remaining backing as a Morpho loan to Stream,” Elixir wrote on X. 

According to Elixir, the team is now working with alternative decentralized lenders Euler, Morpho, Compound, and vault curators to liquidate its Stream positions and distribute repayments to deUSD holders. “We still believe this will be honored 1 for 1,” Elixir said.

“deUSD remains fully backed and Elixir is beginning the process of unwinding its lending position to Stream, working with the team directly,” it added. “Any affected LPs in AMM pools or lending markets will be able to claim the full value of their position.”